Federal Appeals Court Blocks Lawsuit Over ‘Misleading’ Debt Collection Efforts

From the Florida Phoenix:

By Michael Moline
July 7, 2020

Two debtors are barred from suing a collection agency over allegedly “misleading” dunning letters because they were never actually deceived, a federal appeals court that covers three Southeastern states including Florida ruled in a split decision this week.

Monday’s majority opinion by the U.S. Court of Appeals for the 11th Circuit concludes that the debtors — John Trichell of Alabama and Georgia resident Keith Cooper — failed to show any concrete and particularized harm from the letters sent to them by Midland Credit Management Inc.of San Diego.

The court’s jurisdiction covers those states and Florida, which means the precedent will control any cases brought by debtors in Florida.

Centuries of English and U.S. legal tradition as well as acts of Congress require plaintiffs to suffer such harms before they may sue, Judge Gregory Katsas wrote for himself and Chief Judge William Pryor.

“In short, under our common-law tradition, there can be no recovery if the plaintiff is none the worse off for the misrepresentation, however flagrant it may have been,” Katsas wrote.

The letters offered options for repaying the loans and “put this debt behind you.” However, collection on both old debts was time barred under state law in Alabama and Georgia, as noted in a disclaimer tucked at the bottom of each letter.

Both men claimed the letters nevertheless were misleading. Trichell filed a proposed class action on behalf of less sophisticated debtors. In his own lawsuit, Cooper argued that he would again have been legally liable for the entire debt had he taken any steps toward repayment. Both cited the federal Fair Debt Collection Practices Act.

The opinion notes that other federal appeals courts have split on the issue. And Judge Beverly Martin dissented in this case, at least regarding Cooper’s claim.

“He says that if he had acted on Midland’s letter and made a payment on his debt, he would have ‘expos[ed] him[self] to a potential lawsuit that he would not have previously been exposed to,’ she wrote.

“According to the complaint, Midland’s letter thus employed ‘deceptive means’ ‘[w]ith respect to [Mr. Cooper].’ I view Mr. Cooper’s complaint to sufficiently allege that Midland’s letter put him at real risk of making a payment on his time-barred debt.

This story was originally published by the Florida Phoenix. For more stories from the Florida Phoenix, visit FloridaPhoenix.com.